TCA Postmortem: Consolidation News Framed Press Tour Conversation

With the power of fans growing and the influence of TV reviews declining in the age of social media, the once marque summer TCA press tour has been taking a back seat to Comic-Con. Once again, the Los Angeles critics convention served as a warm-up for the San Diego geekfest, with the networks trying to save their noisy announcements for the Con. But what would’ve been another uneventful summer TCA was livened up by two big consolidation stories that broke in the first and second week — 21st Century Fox’s decision to put both the broadcast network and 20th Century Fox TV under the studio’s chairmen and CEOs Dana Walden and Gary Newman, and the company’s (for now unsuccessful) bid to acquire Time Warner.

The first news, which had been widely expected, was met largely with approval as an inevitable move in an industry where owning content is becoming more and more important. CBS has helped grow CSI into a billion-dollar franchise for the parent company, which owns the show. Compare that with The Big Bang Theory, which CBS developed and nurtured to a blockbuster hit that would make as much as $3 billion — for another company, Warner Bros. TV. Watching how much money it has made for WBTV, with the Chuck Lorre series, and for 20th Century Fox TV, with How I Met Your Mother, the network focused on growing its own syndicatable comedies, recently renewing CBS Studios-produced The Millers for a second season. During CBS’ TCA executive session, chairman Tassler was asked whether ownership played a role in the decision to renew The Millers over two 20th TV freshmen, The Crazy Ones, which drew bigger DVR ratings increases, and Friends with Better Lives, which showed better retention. “We will never ever, ever discriminate based solely on ownership,” Tassler said. “We feel that The Millers has a lot of great story material still imbedded in the DNA of the show.”

Still, with all things equal-ish, networks tend to favor their own. As value of content ownership continues to grow with the proliferation of auxiliary markets, cable networks have been joining their broadcast counterparts in the quest to own as many of their shows as they can. Fox had been a rare exception, opening widely its schedule to outside suppliers in the past few years under Kevin Reilly, but it is now getting in with the trend by unifying the network and its sister studio. As Fox Networks Group chairman Peter Rice put it at TCA, “The perfect win for the company is a hit on our network that’s owned by the studio.”

Valuable hits used to be mostly multi-camera comedies and crime procedurals, which were lucrative properties in off-network syndication. Now, with digital platforms emerging as major players in the off-network market and more buyers than ever globally, any show with a devoted following is an asset. The softly rated but acclaimed CBS drama The Good Wife was able to fetch nearly $2 million per episode for the network’s sibling studio in a four-way agreement with Amazon, Hulu, Hallmark Channel and TV stations in broadcast syndication. Dark, heavily serialized cable drama Breaking Bad, which was doing only so-so in its first couple of seasons on AMC, became a blockbuster on Netflix.

With digital platforms eager to bulk up their programming offerings, the networks don’t have to wait years to get a windfall for the shows they own anymore. CBS’ owned dramas Under The Dome and Extant were profitable before they hit the air thanks to a deal with Amazon, which got fresh episodes four days after their premiere on CBS, and strong international sales.

Owning content eliminated a lot of roadblocks, one of the biggest being digital rights. Networks want to own the digital rights to their series, something that regularly becomes a point of contention in negotiations when the producer is an outside studio that does not want to relinquish those rights in order to keep the streaming value of its properties. CBS wouldn’t have been able to make the Amazon deals for Under The Dome and Extant, as well as the pact with Netflix for next summer’s Zoo, if the series were not in-house. The networks also argue that not being able to make more than the most recent five episodes of its freshman and sophomore shows available online prevents new viewers from coming onto the series so they could grow.

While the Walden-Newman announcement was about the continuing proliferation of vertical integration, the news of Fox’s efforts to buy Time Warner was about the scale of those vertically integrated companies. With the glut of programming out there, you need size to thrive. The three TV companies that are considered most vulnerable are Scripps, AMC Networks and Discovery Communications. If they don’t bulk up, they are at the mercy of the cable, satellite and digital carriers who may balk at their fee demands at any time and drop them. To survive, they need clout which they will get by being acquired or even band together.

21st Century Fox TV is pursuing the same on a much larger scale with a Time Warner acquisition that will bring together some of the biggest content generators — two of the leading movie studios, Warner Bros. and 20th Century Fox, and two of the leading TV studios, Warner Bros. TV and 20th Century Fox TV. Comcast and Disney have been on a shopping spree over the past few years (NBCUniversal, Time Warner Cable for Comcast; Marvel, Lucasfilm for Disney). So, as big as a combined Fox-Time Warner company could be, it still would not be able to rival the size of Disney or Comcast. That makes acquisitions in Fox and Time Warner’s future inevitable. And if Fox chief Rupert Murdoch’s tenacity in previous pursuits is any indication, the unavoidable acquisition would involve both companies.